If you were waiting anxiously for the Department of Labor’s proposed Fiduciary Rule you will have to wait a bit longer. The DOL announced this week that they would not meet next month’s deadline regarding the proposed regulation raising investment advice standards for retirement assets.
Back in 2010, the DOL started to work on an expanded definition of fiduciary for anyone advising customers about a retirement plan. The purpose of the new regulation is to hold financial advisors accountable for the guidance they give to their retirement customers.
After major resistance from the financial community, claiming the new rule would affect compensation for brokers selling Individual Retirement Markets, the DOL withdrew their proposal. Although the DOL withdrew their proposal, it did not mean they were no longer pursuing the amended fiduciary definition. Assistant Labor Secretary Phyllis Borzi stated, We’re trying very hard to make sure we’ve crossed all the T’s and dotted all the I’s. We want to be absolutely sure we’ve given it our best shot before publishing the regulation.
One area of concern with the initial proposed regulation was the impact on brokers selling Individual Retirement Accounts. Ms. Borzi stated the revised proposal would address the IRA. There’s an even greater need in the IRA marketplace to protect consumers from conflicted advice, Ms. Bozi said. What I’m talking about is making sure the advice you give is primarily, overwhelmingly and unassailably the best for the client, said Ms. Borzi.
Given the lack of clarity regarding what the final regulation would have included, it is hard to determine if the new delay should be considered a victory or a loss for investors. This subject is one of the items to be discussed at the NAPA Fly-In Forum next week, which LAMCO will be attending. We will keep you updated after this forum.